TITLE 26. HEALTH AND HUMAN SERVICES

PART 1. HEALTH AND HUMAN SERVICES COMMISSION

CHAPTER 567. CERTIFICATE OF PUBLIC ADVANTAGE

The Executive Commissioner of the Texas Health and Human Services Commission (HHSC) proposes new §§567.1 - 567.6, 567.21 - 567.26, 567.31 - 567.33, 567.41, and 567.51 - 567.54 in Texas Administrative Code (TAC) Title 26, Part 1, Chapter 567.

BACKGROUND AND PURPOSE

The proposal is necessary to implement House Bill (H.B.) 3301, 86th Legislature, Regular Session, 2019, which added Chapter 314A to the Texas Health and Safety Code (HSC). This chapter requires HHSC, as the agency designated by the Governor under HSC § 314A.004, to adopt rules for the administration and implementation of Chapter 314A. This chapter permits qualifying hospitals in certain low-population counties to apply for a Certificate of Public Advantage (COPA), which grants merging hospitals immunity from federal and state antitrust laws.

The proposed rules require hospitals eligible to apply for a COPA to pay a fee if applying for a COPA and, if granted a COPA, pay an annual supervision fee, report changes that could affect the COPA, submit an annual report, request approval from HHSC to change rates, and submit a corrective action plan if found to be out of compliance with any of 26 TAC Chapter 567.

Additionally, a merger could reduce competition, which could have an adverse impact on rural communities.

SECTION-BY-SECTION SUMMARY

Proposed new §567.1, relating to Purpose, describes the purpose of the rules in 26 TAC, Chapter 567.

Proposed new §567.2, relating to Definitions, defines the key terms and phrases used in the rules.

Proposed new §567.3, relating to Applicability, describes the criteria for hospitals to be eligible to apply for a COPA.

Proposed new §567.4, relating to Certificate of Public Advantage Required, notes that a merger agreement will not receive immunity under HSC Chapter 314A without a COPA.

Proposed new §567.5, relating to Compliance, describes the requirements for applying and operating under a COPA.

Proposed new §567.6, relating to Scope, describes the parameters and limitations of a COPA.

Proposed new §567.21, relating to Changes That Could Affect the Certificate of Public Advantage, requires applicants to notify HHSC of certain events concerning hospitals that are party to the agreement.

Proposed new §567.22, relating to Application, describes the COPA application process and requirements.

Proposed new §567.23, relating to Texas Health and Human Services Commission Review, notes HHSC's standard of review of the application.

Proposed new §567.24, relating to Attorney General Review, describes HHSC's duty to consult with the Attorney General on each COPA application.

Proposed new §567.25, relating to Fees, describes the COPA application fee and the annual supervision fee for each hospital operating under a COPA.

Proposed new §567.26, relating to Conditions for Issuing a Certificate of Public Advantage, describes the conditions under which HHSC will issue a COPA.

Proposed new §567.31, relating to Terms, notes HHSC's ability to require hospitals operating under a COPA to comply with additional terms or conditions, if necessary.

Proposed new §567.32, relating to Annual Report, describes the annual reporting requirements for each hospital operating under a COPA.

Proposed new §567.33, relating to Voluntary Termination, allows a hospital operating under a COPA to voluntarily terminate a COPA on 30 days' notice.

Proposed new §567.41, relating to Rate Reviews for Hospitals Operating Under a Certificate of Public Advantage, describes the review process for proposed rate changes for hospital services and requirements for HHSC's approval or denial of a proposed rate change.

Proposed new §567.51, relating to Supervision, describes the duty of HHSC to supervise each hospital operating under a COPA.

Proposed new §567.52, relating to Annual Review, describes HHSC's annual review process.

Proposed new §567.53, relating to Investigation; Consequences, describes HHSC's authority to investigate a hospital and the potential consequences of an investigation.

Proposed new §567.54, relating to Corrective Action Plan; describes HHSC's authority to require a corrective action plan and the timeframes associated with corrective action plans.

FISCAL NOTE

Trey Wood, Chief Financial Officer, has determined that for each year of the first five years that the rules will be in effect, there will be an estimated additional cost to HHSC and an increase in revenue to state government as a result of enforcing and administering the rules as proposed.

HHSC will not use the fiscal impact summary that was based on projected agency needs identified in March 2019, because those needs were based on the introduced version of the bill and not the final version of the bill. HHSC originally intended to add full time employees to implement the provisions of HB 3301. HHSC has now determined that existing resources will be used to process applications and provide supervision under these proposed rules.

The proposed rules will increase state revenue. The revenue will not be remitted to HHSC and will instead be added to the state's General Revenue fund.

The application fee for a COPA is $75,000.

The annual supervision fee is $200,000 for each hospital operating under a COPA.

HHSC has identified 16 hospitals that are eligible to apply for a COPA, but HHSC cannot determine the number of hospitals that will apply for a COPA. As long as a hospital is eligible under the law, it has the right to apply. Thus, HHSC will not be able to estimate costs associated with the COPA rules.

As of the date of these proposed rules, HHSC has received two COPA applications.

GOVERNMENT GROWTH IMPACT STATEMENT

HHSC has determined that during the first five years that the rules will be in effect:

(1) the proposed rules will not create or eliminate a government program;

(2) implementation of the proposed rules will not affect the number of HHSC employee positions;

(3) implementation of the proposed rules will require an increase in future legislative appropriations;

(4) the proposed rules will require an increase in fees paid to HHSC;

(5) the proposed rules will create new rules;

(6) the proposed rules will not expand, limit, or repeal existing rules; and

(7) the proposed rules will increase the number of individuals subject to the rules.

HHSC has insufficient information to determine the proposed rules' effect on the state's economy. HHSC will request the legislature to appropriate the fees collected for COPA applications and annual supervision. In order to apply for a COPA, an applicant must pay a fee to HHSC, and HHSC will administer a fee for annual supervision of a COPA. The proposed rules only apply to a small number of qualifying stakeholders, based statutory requirements that the hospital be located in certain counties (those with a population of less than 100,000 and not adjacent to a county with a population of 250,000 or more; or with a population of more than 100,000 and less than 150,000 and not adjacent to a county with a population of 100,000 or more).

SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COMMUNITY IMPACT ANALYSIS

Trey Wood has also determined that there will be an adverse economic effect on small businesses or micro-businesses, or rural communities.

HHSC estimates that the number of hospitals subject to the proposed rules is 16. The 16 hospitals eligible for a COPA are in rural communities. HHSC does not have sufficient information at this time to determine the economic impact of the proposed rules on small businesses, micro-businesses, and rural communities.

Alternative methods were not considered because the content of the proposed rule is required by state statute, and there are no alternative methods of achieving the purpose of the proposed rule that are consistent with the health, safety, environmental, and economic welfare of the state.

LOCAL EMPLOYMENT IMPACT

The proposed rules could affect a local economy, either positively by keeping hospitals open and allowing them to coordinate services, or negatively by reducing competition and wages. Because the number of hospitals that will participate and the number of mergers that may form are all unknown, more detailed economic effects cannot be determined at this time.

The proposed rules will only affect private hospitals. Public hospitals are not eligible to apply for a COPA under H.B. 3301 and the proposed rules. Therefore, no revenue will be generated from local governments.

COSTS TO REGULATED PERSONS

Texas Government Code §2001.0045 does not apply to these rules because the rules are necessary to protect the health, safety, and welfare of the residents of Texas and implement legislation that does not specifically state that §2001.0045 applies to the rules.

The proposed rules require hospitals eligible to apply for a COPA to pay a fee if applying for a COPA and, if granted a COPA, pay an annual supervision fee, report changes that could affect the COPA, submit an annual report, request approval from HHSC to change rates, and submit a corrective action plan if found to be out of compliance with any of 26 TAC Chapter 567.

PUBLIC BENEFIT AND COSTS

David Kostroun, Deputy Executive Commissioner of Regulatory Services, has determined that for each year of the first five years the rules are in effect, the public will benefit from the adoption of rules to implement H.B. 3301. Hospital mergers under this legislation will benefit the public by maintaining or improving the quality, efficiency, and accessibility of health care services offered to the public, and these benefits may outweigh any anticompetitive effects of joining competitors to address unique challenges in providing health care services in rural areas.

Trey Wood has also determined that for the first five years the rules are in effect, persons who are required to comply with the proposed rules may incur economic costs because the rules require an application fee and annual supervision fees for hospitals operating under a COPA. HHSC does not have sufficient information on operational changes in hospitals that may be necessary to comply with this rule.

TAKINGS IMPACT ASSESSMENT

HHSC has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Texas Government Code §2007.043.

PUBLIC COMMENT

Written comments on the proposal may be submitted to the Rules Coordination Office, P.O. Box 13247, Mail Code 4102, Austin, Texas 78711-3247, or street address 4900 North Lamar Boulevard, Austin, Texas 78751; or by email to HCQ_PRT@hhsc.state.tx.us.

To be considered, comments must be submitted no later than 31 days after the date of this issue of the Texas Register. Comments must be: (1) postmarked or shipped before the last day of the comment period; (2) hand-delivered before 5:00 p.m. on the last working day of the comment period; or (3) emailed before midnight on the last day of the comment period. If last day to submit comments falls on a holiday, comments must be postmarked, shipped, or emailed before midnight on the following business day to be accepted. When emailing comments, please indicate "Comments on Proposed Rule 20R041" in the subject line.

SUBCHAPTER A. GENERAL PROVISIONS

26 TAC §§567.1 - 567.6

STATUTORY AUTHORITY

The new sections are authorized by Texas Government Code §531.0055, which provides that the Executive Commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services agencies, and HSC §314A.005, which requires HHSC, as the agency designated by the governor under HSC §314A.004, to adopt rules for the administration and implementation of Chapter 314A.

The new sections implement Texas Government Code §531.0055 and HSC, Chapter 314A.

§567.1.Purpose.

The purpose of this chapter is to implement Texas Health and Safety Code Chapter 314A, which requires qualifying hospitals seeking to negotiate and enter into a merger agreement to be certified by the Texas Health and Human Services Commission through the issuance of a Certificate of Public Advantage.

§567.2.Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Certificate of Public Advantage (COPA)--The written approval by the Texas Health and Human Services Commission that governs a cooperative agreement.

(2) Hospital--A nonpublic general hospital that is licensed under Texas Health and Safety Code Chapter 241 and is not maintained or operated by a political subdivision of this state.

(3) Merger Agreement--An agreement among two or more hospitals for the consolidation by merger, or other acquisition or transfer of assets, by which ownership or control over substantially all the stock, assets, or activities of one or more previously licensed and operating hospitals is placed under the control of another licensed hospital, or hospitals, or another entity that controls the hospitals.

§567.3.Applicability.

This chapter only applies to a merger agreement among hospitals, each of which is located within a county that:

(1) contains two or more hospitals; and

(2) has a population of:

(A) less than 100,000 and is not adjacent to a county with a population of 250,000 or more; or

(B) more than 100,000 and less than 150,000 and is not adjacent to a county with a population of 100,000 or more.

§567.4.Certificate of Public Advantage Required.

A merger agreement between hospitals may not receive immunity under Texas Health and Safety Code Chapter 314A without a Certificate of Public Advantage.

§567.5.Compliance.

(a) Each party to a merger agreement shall comply with Texas Health and Safety Code Chapter 314A (relating to Merger Agreements Among Certain Hospitals), this chapter, and all statutes and rules applicable under the hospital license.

(b) Each hospital operating under a Certificate of Public Advantage shall agree to any ongoing supervision the Texas Health and Human Services Commission may require.

§567.6.Scope.

(a) A Certificate of Public Advantage (COPA) is issued for a merger agreement identified in a COPA application.

(b) A COPA may not be altered.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 26, 2020.

TRD-202002569

Karen Ray

Chief Counsel

Health and Human Services Commission

Earliest possible date of adoption: August 9, 2020

For further information, please call: (512) 834-4591


SUBCHAPTER B. APPLICATION AND ISSUANCE

26 TAC §§567.21 - 567.26

STATUTORY AUTHORITY

The new sections are authorized by Texas Government Code §531.0055, which provides that the Executive Commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services agencies, and HSC §314A.005, which requires HHSC, as the agency designated by the governor under HSC §314A.004, to adopt rules for the administration and implementation of Chapter 314A.

The new sections implement Texas Government Code §531.0055 and HSC, Chapter 314A.

§567.21.Changes That Could Affect the Certificate of Public Advantage.

A Certificate of Public Advantage (COPA) applicant shall notify the Texas Health and Human Services Commission of the following in writing as soon as practicable:

(1) termination of the merger agreement;

(2) cessation of operation of any hospital party to the agreement, and the certificate holder shall include in the written notice the location where the medical records will be stored and the identity and telephone number of the custodian of the medical records;

(3) change in CMS Certification Number of any hospital party to the agreement;

(4) change to the accrediting organization status of any hospital party to the agreement;

(5) change in hospital name, telephone number, or administrator of any hospital party to the agreement;

(6) pending sale of or change in ownership of any hospital party to the agreement;

(7) bankruptcy of any hospital party to the agreement; or

(8) federal antitrust action related to the COPA.

§567.22.Application.

(a) The acquiring party in a proposed merger agreement (the applicant) may apply to the Texas Health and Human Services Commission (HHSC) for a Certificate of Public Advantage (COPA) governing the merger agreement.

(b) An application is not complete unless it contains all the following information:

(1) an accurate and complete application form;

(2) a letter of intent from each party to the merger agreement;

(3) an executive summary;

(4) a written copy of the proposed merger agreement;

(5) a description of the nature and scope of the proposed merger;

(6) a copy of the most recent application for license renewal for each party to the merger agreement;

(7) a patient census for each hospital involved in the merger agreement;

(8) health outcomes for the geographic area of each county in which a hospital involved in the merger agreement is located;

(9) Pricing data reported separately for all inpatient and outpatient services that occurred at each hospital party to the merger agreement for the previous five years and monthly aggregated data, computed separately for Medicaid, Medicare, commercial, and all other payors, including:

(A) number of patients, classified by type of inpatient or outpatient service;

(B) total billed charges of the hospital, stated separately to include and exclude any physician services;

(C) total amounts of the hospital's billed charges allowed under health plan contracts, stated separately to include and exclude any physician services; and

(D) total amounts of the hospital's billed charges actually paid by health plans and patients (combined), stated separately to include and exclude any physician services;

(10) any quality metrics that will be used to measure the quality improvements of the COPA such as observation status;

(11) information regarding the current state of competitive dynamics and projections of how the market will operate in the county where the proposed merger would occur;

(12) an analysis of the merger agreement that provides a detailed explanation as to:

(A) whether the proposed merger agreement would likely benefit the public by maintaining or improving the quality, efficiency, and accessibility of health care services offered to the public; and

(B) whether the likely benefits resulting from the proposed merger agreement outweigh any disadvantages attributable to a reduction in competition that may result from the proposed merger;

(13) the application fee;

(14) any evidence of support from municipalities and counties served by each hospital party to the proposed merger; and

(15) any additional information HHSC deems necessary based on the circumstances specific to the application.

(c) If an applicant believes the application contains proprietary information that is required to remain confidential, the applicant may submit two applications:

(1) one application with complete information for HHSC's use with proprietary information clearly identified but not redacted, and

(2) one application, labeled as redacted and available for public release, with proprietary information redacted.

(d) An applicant shall submit a complete unredacted copy of the application and any related materials to the Attorney General at the same time it submits the application to HHSC.

(e) An application shall not be deemed filed until HHSC determines the application is complete. HHSC may request additional information necessary to make the application complete and to meet the requirements of Texas Health and Safety Code Chapter 314A and this chapter.

§567.23.Texas Health and Human Services Commission Review.

Upon reception of a complete application, the Texas Health and Human Services Commission will review the application in accordance with the standards prescribed by Texas Health and Safety Code §314A.056 and this chapter.

§567.24.Attorney General Review.

The Texas Health and Human Services Commission will consult with the Attorney General regarding each Certificate of Public Advantage application.

§567.25.Fees.

(a) All fees shall be paid to the Texas Health and Human Services Commission (HHSC) and are nonrefundable.

(b) The fee for a Certificate of Public Advantage (COPA) application is $75,000 and must be submitted with the application.

(c) The annual fee for supervision of a COPA is $200,000 for each hospital party to the merger agreement.

(1) The first supervision fee shall be paid no later than 30 calendar days after the date HHSC issued the COPA.

(2) Each subsequent supervision fee shall be paid no later than the anniversary of the date HHSC issued the COPA.

§567.26.Conditions for Issuing a Certificate of Public Advantage.

The Texas Health and Human Services Commission (HHSC) will issue a Certificate of Public Advantage if:

(1) it determines under the totality of the circumstances that:

(A) the proposed merger would likely benefit the public by maintaining or improving the quality, efficiency, and accessibility of health care services offered to the public; and

(B) the likely benefits resulting from the proposed merger agreement outweigh any disadvantages attributable to a reduction in competition that may result from the proposed merger; and

(2) the application:

(A) provides specific evidence showing that the proposed merger would likely benefit the public;

(B) explains in detail how the likely benefits resulting from the proposed merger agreement outweigh any disadvantages attributable to a reduction in competition; and

(C) sufficiently addresses the following factors:

(i) the quality and price of hospital and health care services provided to citizens of this state;

(ii) the preservation of sufficient hospitals within a geographic area to ensure public access to acute care;

(iii) the cost efficiency of services, resources, and equipment provided or used by the hospitals that are a party to the merger agreement;

(iv) the ability of health care payors to negotiate payment and service arrangements with hospitals proposed to be merged under the agreement;

(v) the extent of any reduction in competition among physicians, allied health professionals, other health care providers, or other persons providing goods or services to, or in competition with, hospitals; and

(vi) any other factor the applicant deems relevant to HHSC's determination under Texas Health and Safety Code §314A.056.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 26, 2020.

TRD-202002570

Karen Ray

Chief Counsel

Health and Human Services Commission

Earliest possible date of adoption: August 9, 2020

For further information, please call: (512) 834-4591


SUBCHAPTER C. OPERATIONAL REQUIREMENTS

26 TAC §§567.31 - 567.33

STATUTORY AUTHORITY

The new sections are authorized by Texas Government Code §531.0055, which provides that the Executive Commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services agencies, and HSC §314A.005, which requires HHSC, as the agency designated by the governor under HSC §314A.004, to adopt rules for the administration and implementation of Chapter 314A.

The new sections implement Texas Government Code §531.0055 and HSC, Chapter 314A.

§567.31.Terms.

The Texas Health and Human Services Commission may include terms or conditions of compliance in connection with a Certificate of Public Advantage issued if necessary to ensure that the proposed merger likely benefits the public as specified in this chapter.

§567.32.Annual Report.

On the anniversary of the date the Texas Health and Human Services Commission (HHSC) issued a Certificate of Public Advantage (COPA), each hospital operating under the COPA shall submit an annual report to HHSC. The report must include:

(1) information about the extent of the benefits attributable to the issuance of the COPA;

(2) if applicable, information about the hospital's actions taken:

(A) in furtherance of any commitments made by the parties to the merger; and

(B) to comply with terms imposed by HHSC as a condition for approval of the merger agreement;

(3) a description of the activities conducted by the hospital under the merger agreement;

(4) information relating to the price, cost, and quality of and access to health care for the population served by the hospital; and

(5) any other information required by HHSC to ensure compliance with Texas Health and Safety Code Chapter 314A and this chapter, including information relating to compliance with any terms or conditions for issuance of the COPA.

§567.33.Voluntary Termination.

A hospital operating under a Certificate of Public Advantage (COPA) approved under this chapter may voluntarily terminate its COPA by giving the Texas Health and Human Services Commission notice at least 30 days before the date of the termination.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 26, 2020.

TRD-202002571

Karen Ray

Chief Counsel

Health and Human Services Commission

Earliest possible date of adoption: August 9, 2020

For further information, please call: (512) 834-4591


SUBCHAPTER D. RATE REVIEW

26 TAC §567.41

STATUTORY AUTHORITY

The new section is authorized by Texas Government Code §531.0055, which provides that the Executive Commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services agencies, and HSC §314A.005, which requires HHSC, as the agency designated by the governor under HSC §314A.004, to adopt rules for the administration and implementation of Chapter 314A.

The new section implements Texas Government Code §531.0055 and HSC, Chapter 314A.

§567.41.Rate Reviews for Hospitals Operating Under a Certificate of Public Advantage.

(a) House Bill 3301, passed by the 86th Texas Legislature and signed by the Governor, requires the Texas Health and Human Services Commission (HHSC) to conduct rate reviews for certain hospitals operating under a Certificate of Public Advantage (COPA).

(b) A hospital operating under a COPA pursuant to Texas Health and Safety Code §314A.056 may not change rates for hospital services without prior approval from HHSC.

(c) At least 90 days before the implementation of any proposed change in rates for inpatient or outpatient hospital services and, if applicable, at least 60 days before the execution of a reimbursement agreement with a third-party payor, a hospital operating under a COPA must submit to HHSC:

(1) a completed application;

(2) any proposed change in rates for services that meet the definition in 25 TAC §133.2 of "inpatient services" or "outpatient services;"

(3) if applicable, any change in reimbursement rates under a reimbursement agreement with a third-party payor;

(4) for an agreement with a third-party payor, other than an agreement described by paragraph (5) of this subsection, or in which rates are set under the Medicare or Medicaid program, information showing:

(A) that the hospital and the third-party payor have agreed to the proposed rates;

(B) whether the proposed rates are less than the corresponding amounts in the producer price index published by the Bureau of Labor Statistics of the United States Department of Labor relating to the hospital services for which the rates are proposed, or a comparable price index chosen by HHSC if the producer price index described by this paragraph is abolished; and

(C) if the proposed rates are above the corresponding amounts in the producer price index, as described by subparagraph (B) of this paragraph, a justification for proposing rates above the corresponding amounts in the producer price index;

(5) to the extent allowed by federal law, for an agreement with a managed care organization that provides or arranges for the provision of health care services under the Medicare or Medicaid program, information showing:

(A) whether the proposed rates are different from rates under an agreement that was in effect before the date the applicable merger agreement took effect;

(B) whether the proposed rates are different from the rates most recently approved by HHSC for the applicable hospital, if HHSC has previously approved rates for the applicable hospital following the issuance of the COPA under this chapter that governs the hospital; and

(C) if the proposed rates exceed rates described by subparagraphs (A) or (B) of this paragraph, a justification for proposing rates in excess of those rates; and

(6) any information concerning costs, patient volume, acuity, payor mix, and other information requested by HHSC.

(d) Any information requested by HHSC, or its designee, shall be provided to HHSC or its designee no later than 10 business days after the request.

(e) HHSC in its sole discretion may designate an individual or entity contracted with HHSC to review the provided materials and make a recommendation to HHSC.

(f) HHSC shall approve the proposed rate change if HHSC determines that:

(1) the proposed rate change likely benefits the public by maintaining or improving the quality, efficiency, and accessibility of health care services offered to the public; and

(2) the proposed rate does not inappropriately exceed competitive rates for comparable services in the hospital's market area.

(g) HHSC shall deny or modify the proposed rate change to meet requirements outlined in subsection (f) of this section, if HHSC determines that the proposed rate change does not satisfy subsection (f) of this section.

(h) HHSC will notify the hospital in writing of HHSC's decision to approve, deny, or modify the proposed rate change not later than the 30th day before the implementation date of the proposed change.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 26, 2020.

TRD-202002572

Karen Ray

Chief Counsel

Health and Human Services Commission

Earliest possible date of adoption: August 9, 2020

For further information, please call: (512) 834-4591


SUBCHAPTER E. ENFORCEMENT

26 TAC §§567.51 - 567.54

STATUTORY AUTHORITY

The new sections are authorized by Texas Government Code §531.0055, which provides that the Executive Commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services agencies, and HSC §314A.005, which requires HHSC, as the agency designated by the governor under HSC §314A.004, to adopt rules for the administration and implementation of Chapter 314A.

The new sections implement Texas Government Code §531.0055 and HSC, Chapter 314A.

§567.51.Supervision.

The Texas Health and Human Services Commission will supervise each hospital operating under a Certificate of Public Advantage to ensure that the immunized conduct of a merged entity furthers the purposes of this chapter.

§567.52.Annual Review.

(a) Upon receipt of the annual report required by §567.32 of this chapter (relating to Annual Report), the Texas Health and Human Services Commission (HHSC) will conduct an annual review of each approved Certificate of Public Advantage (COPA).

(b) Prior to any review, HHSC will ask the Attorney General whether the Attorney General intends to conduct any review of the COPA.

(c) HHSC will not complete an annual review until:

(1) the Attorney General informs HHSC whether that office intends to conduct any review of the COPA; and

(2) the Attorney General has had the opportunity to conduct the review, if needed.

§567.53.Investigation; Consequences.

To ensure that the activities of a hospital resulting from a merger agreement continue to benefit the public, the Texas Health and Human Services Commission (HHSC) may:

(1) investigate the hospital's activities; and

(2) require the hospital to perform a certain action or refrain from a certain action or revoke the hospital's certificate of public advantage, if HHSC determines that:

(A) the hospital is not complying with Texas Health and Safety Code Chapter 314A, this chapter, or a term or condition of compliance with the Certificate of Public Advantage (COPA) governing the hospital's immunized activities;

(B) HHSC's approval and issuance of the COPA was obtained as a result of material misrepresentation;

(C) the hospital has failed to pay any fee required under this chapter; or

(D) the benefits resulting from the approved merger no longer outweigh the disadvantages attributable to the reduction in competition resulting from the approved merger.

§567.54.Corrective Action Plan.

(a) If the Texas Health and Human Services Commission (HHSC) determines that an activity of a hospital operating under a Certificate of Public Advantage does not benefit the public as described by this chapter or no longer meets the standard prescribed by this chapter, HHSC will notify the hospital that it must adopt a plan to correct any deficiency in the hospital's activities.

(b) No later than 20 calendar days after notification by HHSC, the hospital shall return a written corrective action plan to HHSC responding to each cited deficiency, including timeframes for corrections, together with any additional evidence of compliance.

(c) If HHSC determines the corrective action plan does not sufficiently address each cited deficiency, HHSC will notify the hospital that it must submit a revised corrective action plan. A hospital shall submit a revised corrective action plan no later than 20 calendar days after notification by HHSC.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 26, 2020.

TRD-202002573

Karen Ray

Chief Counsel

Health and Human Services Commission

Earliest possible date of adoption: August 9, 2020

For further information, please call: (512) 834-4591


CHAPTER 746. MINIMUM STANDARDS FOR CHILD-CARE CENTERS

SUBCHAPTER B. ADMINISTRATION AND COMMUNICATION

DIVISION 2. REQUIRED NOTIFICATION

26 TAC §746.303

The Executive Commissioner of the Texas Health and Human Services Commission (HHSC) proposes an amendment to §746.303, concerning What changes must I notify Licensing of regarding the child-care center's designee, governing body, and director?

BACKGROUND AND PURPOSE

The purpose of the proposal is to implement the portion of Senate Bill (S.B.) 708, 86th Legislature, Regular Session, 2019, which adds Subsection 42.0412(c-1) to the Texas Human Resources Code (HRC). HRC 42.0412(c-1) requires HHSC Child Care Licensing (CCL) to collect the total number of employees who left employment with each licensed child-care center during the preceding calendar year and publish the data on the Search Texas Child Care website. CCL is implementing this legislative requirement by changing §746.303 to require licensed child-care centers to report the total number of employees who ceased working at the center the previous calendar year to CCL through their online CCL account. IT changes will enable this information to be published on the Search Texas Child Care website.

SECTION-BY-SECTION SUMMARY

The proposed amendment to §746.303 adds new subsection (b), which requires a center to annually report to CCL the total number of employees who ceased working at the center during the previous calendar year.

FISCAL NOTE

Trey Wood, Chief Financial Officer, has determined that for each year of the first five years that the rule will be in effect, enforcing or administering the rule does not have foreseeable implications relating to costs or revenues of state or local governments.

GOVERNMENT GROWTH IMPACT STATEMENT

HHSC has determined that during the first five years that the rule will be in effect:

(1) the proposed rule will not create or eliminate a government program;

(2) implementation of the proposed rule will not affect the number of HHSC employee positions;

(3) implementation of the proposed rule will result in no assumed change in future legislative appropriations;

(4) the proposed rule will not affect fees paid to HHSC;

(5) the proposed rule will not create a new rule;

(6) the proposed rule will expand an existing rule;

(7) the proposed rule will not change the number of individuals subject to the rule; and

(8) the proposed rule will not affect the state's economy.

SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COMMUNITY IMPACT ANALYSIS

Trey Wood has also determined that there could be an adverse economic effect on small businesses, micro-businesses, or rural communities. HHSC estimates that there are approximately 8,800 Licensed Day Care Centers required to comply with the rule. HHSC does not have sufficient information to determine how many small businesses, micro-businesses, or rural communities would be impacted by the proposed rule.

There are no alternative methods of achieving the purpose of the proposed rule that are consistent with the health, safety, environmental, and economic welfare of the state.

LOCAL EMPLOYMENT IMPACT

The proposed rule will not affect a local economy.

COSTS TO REGULATED PERSONS

Texas Government Code §2001.0045 does not apply to this rule because the rule: does not impose a cost on regulated persons and is necessary to implement legislation that does not specifically state that §2001.0045 applies to the rule.

PUBLIC BENEFIT AND COSTS

Jean Shaw, Associate Commissioner for Child Care Licensing, has determined that for each year of the first five years the rule is in effect, the public benefit will be increased transparency about the annual number of employees who leave employment at each licensed child-care center.

Trey Wood has also determined that for the first five years the rule is in effect, there could be anticipated economic costs to persons who are required to comply with the proposed rule. The proposed rule requires licensed day care centers to report the number of staff who ceased working at the center during the previous calendar year using the Center's on-line Child Care Licensing account. While businesses will utilize information currently in their possession to comply with the new reporting requirement, some providers have indicated a cost to gather and report this information. HHSC does not have sufficient information to determine these costs.

TAKINGS IMPACT ASSESSMENT

HHSC has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Texas Government Code §2007.043.

PUBLIC COMMENT

Questions about the content of this proposal may be directed to Aimee Belden at (512) 438-3971 in the Child Care Licensing Department of the HHSC Regulatory Services Division.

Written comments on the proposal may be submitted to Aimee Belden, Rules Writer, Child Care Licensing, Health and Human Services Commission, E-550, P.O. Box 149030, Austin, Texas 78714-9030; or by email to CCLrules@hhsc.state.tx.us.

To be considered, comments must be submitted no later than 31 days after the date of this issue of the Texas Register. Comments must be: (1) postmarked or shipped before the last day of the comment period; (2) hand-delivered before 5:00 p.m. on the last working day of the comment period; or (3) emailed before midnight on the last day of the comment period. If the last day to submit comments falls on a holiday, comments must be postmarked, shipped, or emailed before midnight on the following business day to be accepted. When emailing comments, please indicate "Comments on Proposed Rule 20R025" in the subject line.

STATUTORY AUTHORITY

The amendment is authorized by Texas Government Code §531.0055, which provides that the Executive Commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services agencies.

The amendment affects Texas Government Code §531.0055 and Texas Human Resources Code §42.0412.

§746.303.What changes must I notify Licensing of regarding the child-care center's designee, governing body, [and] director, and employees?

(a) You must notify us in writing, no later than five days after a change is made, regarding:

(1) The designee of your center that is not a sole proprietorship. The designee for a sole proprietorship is the owner/sole proprietor;

(2) The board chair for a corporate facility or other executive officer of the governing body;

(3) The address of the center's designee or governing body; and

(4) The center director.

(b) By January 15 of each year, you must report to us through your online Child Care Licensing Account the total number of employees who ceased working at your center during the previous calendar year.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 29, 2020.

TRD-202002645

Karen Ray

Chief Counsel

Health and Human Services Commission

Earliest possible date of adoption: August 9, 2020

For further information, please call: (512) 438-3971